Military Financial Services Provider Settles With CFPB for Alleged Failure to Disclose Fees

On April 20, 2015, the Consumer Financial Protection Bureau (“CFPB”) announced that it entered a settlement with a Kentucky-based financial services provider over claims that the company charged excessive fees for the payroll deductions of military servicemen, and that it failed to disclose these fees to consumers. The copany allegedly was engaged in an allotment system that aided servicemembers in sending money home to their families and pay creditors through automatic payroll deductions. The company charged a monthly service fee in connection for the services, however, the company allegedly caused excess deductions to accumulare in the payment account by not accurately tracking when a debt was no longer owed. The CFPB alleged that the company’s conduct was unfair, deceptive, and abusive in violation of the Consumer Financial Protection Act (“CFPA”). As part of the settlement, the company agreed to pay over $3 million in restitution.